Active or passive investments? The trillion-dollar question

Passive investment funds have made investing cheaper and better – whether you use them or not!

We’ve been blogging on Enough.ie about the benefits of actively managed investments vs passive, or indexed funds.

What’s the difference?

Actively managed funds are run by a fund manager who – as the name suggests – is actively trying to grow your investment. They dangle the hope of beating the market – and charge accordingly.

But many active funds fail to beat the market – and end up costing you more.

Passive funds have a less ambitious goal. Their aim is simply to mimic the performance of a chosen index, such as the S&P500 index of top US companies.

Their simplicity makes passive investments much cheaper to run – and this benefits you, the investor.

Over the last decade or so, passive funds have become much more widely available. In fact, the Investment Company Institute reports that more than a trillion (!) dollars of savings has been shifted from ‘actively managed’ funds to ‘passively managed’ funds over the last ten years.

So what?

Passives are the Aldi and Lidl of the investment fund world. They have grown quickly, radically cut prices – and forced everyone to up their game!

In the Irish market, this is creating better and cheaper ways to put your money to work.

Are passive investments right for you? Read our article to understand what all of this means for your finances.

Click here to read more on Enough.ie, the site that’s been built to cut financial jargon in Ireland.

By investing €250 a month you could save €17,400 in 5 years

Warning: Past performance is not a reliable guide to future performance. The value of your investments can go down as well as up and you may lose some or all of the money you invest. Investments denominated in a currency other than your base currency may be affected by changes in currency exchange rates.